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Annual Report 2011
Year ended March 31, 2011

Table of contents

  • Page 1
    Annual Report 2011 Year ended March 31, 2011

  • Page 2
    ... sales in its major markets including Japan, North America, Europe, and China. 75 Corporate Data 76 stock Information Forward-Looking Statements Statements made in this Annual Report with respect to Mazda's plans, strategies, and future performance are forward-looking statements based on management...

  • Page 3
    ... speed, we actively communicate with our customers to deliver insiihtful automotive products and services that exceed their expectations. Value We value inteirity, customer focus, creativity, and efficient and nimble actions and respect hiihly motivated people and team spirit. We positively support...

  • Page 4
    ... improvements and increased sales in emerging markets. as in the previous fiscal year, positive free cash flow was maintained, at ¥1.6 billion. a net loss of ¥60.0 billion was recorded. Extraordinary losses included an ¥8.5 billion reserve for business losses at a North American subsidiary and...

  • Page 5
    ... 3.9 2007 (As of March 31) 2008 2009 2010 2011 2007 (As of March 31) 2008 2009 2010 2011 2007 2008 2009 2010 2011 (Years ended March 31) Equity Equity ratio Net financial debt Net debt-to-equity ratio Research and development costs Share of net sales Mazda Annual Report 201 1 3

  • Page 6
    ... Ground Hokkaido Nakasatsunai Proving Ground Hiroshima Plant Hofu Plant Miyoshi Plant Press Kogyo Onomichi Plant* Mazda North American Operations AutoAlliance International Ford Motor Kansas City Assembly Plant* Mazda Motor of America Mazda Canada Mazda Motor de Mexico (number of dealerships: 2,232...

  • Page 7
    ... america 7 2009 6 2010 6 2011 2007 2008 (excluding Mexico) New Zealand 2009 2010 2011 (Years ended March 31) China Regional headquarters R&D Production facilities 23 24 25 26 27 (number of dealerships: 312) Mazda Motor (China) (MCO) MCO China Engineering Support Center FAW Car* Changan Ford...

  • Page 8
    .... SKYACTIV TECHNOLOGY will be one of the key enablers driving this growth. As a company with strong brand value based on this technology, we aim to gain the support of customers who view Mazda as their "One and Only" car manufacturer. I am confident that as this key driver is rolled out globally...

  • Page 9
    Mazda Annual Report 201 1 7

  • Page 10
    ... 2010 production volume, but the year-over-year production level rebounded to 90% in May, and we were able to restore normal operations, including overtime and holiday work, in June. We are planning on a 4% increase in domestic production volume for the March 2012 fiscal year, to 900,000 vehicles...

  • Page 11
    ...equipped with SKYACTIV engine and transmission in Japan, North America, and other major markets during the second half of 201 1, and are looking for a global launch in 2012 of the new compact crossover SUV Mazda CX-5 that is fully equipped with SKYACTIV TECHNOLOGY. Q3 the March 2012 fiscal year is...

  • Page 12
    ...globally to raise brand value Increasing performance while improving costs through development efficiency and streamlined investment Steadily promoting environmental and safety measures based on the Building Block Strategy Expanding and reinforcing production and sales structures in emerging markets...

  • Page 13
    ..., and Malaysia, and sales are growing along with increased production at AutoAlliance (Thailand) Co., Ltd. (AAT). In terms of production, AAT's passenger vehicle plant began manufacturing the Mazda2 hatchback in October 2009, Synergies with Ford include the all-new Mazda BT-50 pickup, which...

  • Page 14
    ... schedule for new model launches New Demio (Japan) New Mazda3 (Japan, North America, etc.) New CX-5 Major models will be successively equipped with sKYaCtiV teCHnologY Have roughly 80% of all vehicles sold in March 2016 fiscal year equipped with SKYACTIV TECHNOLOGY 12 Mazda Annual Report 201 1

  • Page 15
    ...driving pleasure and outstanding environmental and safety performance P.18 Answer 1 Emerging Market Strategy pursuing a growth strategy, primarily in China and the asean market, while strengthening our business in Central and south america as a third pillar Answer 2 Mazda Annual Report 201 1 13

  • Page 16
    ... as an automaker and to provide customers with cars that keep representing exceptional value, Mazda has been striving in recent years to meet the growing demand for environmental and safety performance in automobiles. We believe our job is to address such requirements while continuing to ensure the...

  • Page 17
    ... Technology (Hybrid System) Step-2 Regenerative Braking Step-1 Battery Management Technology (Idling stop system "i-stop") Base technologies New-generation clean diesel engine New-generation platform SKYACTIV-D SKYACTIV-Body SKYACTIV-Chassis New-generation transmissions New-generation direct...

  • Page 18
    ... low to high engine speeds, and greatly increases low- and high-end torque Complies with global emissions regulations (Euro6 in Europe, Tier2Bin5 in North America, and the Post New Long-Term Regulations in Japan) without expensive NOx after-treatment Brake specific fuel consumption (g/kwh) Torque...

  • Page 19
    ... At high speed Ease of starting (uphill) Direct feel Smooth shifting CVT Dual clutch transmission â-Ž â-Ž Conventional automatic transmission â-Ž â-Ž sKYaCtiV-driVe Better sKYaCtiV-Mt new-generation highly efficient manual transmission A new-generation manual transmission with a light shift feel...

  • Page 20
    ... in the developed markets such as Japan, the United states, and europe. Both automobile and parts manufacturers in developed markets continue to shift their production and development functions to emerging markets, and we believe the success or failure of business strategies in emerging markets will...

  • Page 21
    ...increase of 48 from the previous fiscal year-end. Going forward, we will expand into open areas in coastal regions while at the same time accelerating showroom openings in inland regions. asean Market AutoAlliance (Thailand) Co., Ltd. (AAT) was established as a joint venture with Ford Motor Company...

  • Page 22
    ... balance in considerations like local production versus exports of completed vehicles, based on the situation in each country with regard to the tax structure and the extent of trade liberalization. At the same time, we will strengthen our business by expanding sales networks and through marketing...

  • Page 23
    ... US$500 million Head office: Salamanca City, Guanajuato State 2 overview of Brazilian sales business Commencement of operations: March 2013 fiscal year Vehicles to be supplied: Vehicles manufactured in and imported from Japan in the March 2013 fiscal year; imports from Mexico plant planned when it...

  • Page 24
    ... finely tuned balance of stqength ...speed, a dignified tension, and a sophisticated beauty. Mazda...end to end, as if the caq is about to leap out at any time, built aqound a tenacious fqame, with the poweq to instantaneously qelease built-up foqce and the gqaceful beauty of movement. 22 Mazda Annual...

  • Page 25
    Mazda Minagi The Mazda MINAGI is a concept caq that is the fiqst of a new geneqation of pqoducts to embody both new-geneqation SKYACTIV TECHNOLOGY and the KODO-Soul of Motion design theme. By integqating SKYACTIV TECHNOLOGY, which balances... embodies beauty in motion. Mazda Annual Repoqt 201 1 23

  • Page 26
    ... Atenza) Biante Global sales volume Sales markets 252,000 nnnnn Global sales volume Sales market 1 1,000 n Mazda5 (Japanese name: Premacy) Mazda8 (Japanese name: MPV) Global sales volume Sales markets 86,000 Global sales volume Sales markets 8,000 nnn nnnnn 24 Mazda Annual Report 201 1

  • Page 27
    ...North America n Europe n China n Other *1 . Global sales volume is for the March 201 1 fiscal year, sales markets are as of March 31, 201 1 *2. Vehicle specifications differ by market. *3. Images shown are of overseas models for the CX-9 and BT-50, and Japanese models for all others. Mazda Annual...

  • Page 28
    ... adding electric device technologies to base engines with excellent environmental performance. Gasoline hybrids Hydrogen hybrids Idling stop system Average fuel economy for all cars Regenerative braking Plug-in hybrids*, etc. Plan to raise average fuel economy of Mazda vehicles sold globally...

  • Page 29
    Building Block Strategy STeP 1 Battery Management Technology (idling Stop System "i-stop") The i-stop system automatically shuts the engine off temporarily when the vehicle is stopped. The use of i-stop alone can improve fuel economy by 7% to 10% (as measured in Japanese models). Mazda installed i-...

  • Page 30
    ...year north america Tribute models compatible with E85 (gasoline mixed with 85% ethanol) became available beginning in the March 2010 fiscal year Column intelligent-drive Master (i-dM) -a new technology that embodies the principles of Sustainable Zoom-Zoom Mazda has developed i-DM, a driver support...

  • Page 31
    ... at the Mazda Museum in the Hiroshima Head Office, through the "Kids' Quiz on Traffic Safety" website for children, and other projects. initiatives in roads and infrastructure initiatives toward realizing a Safe automotive Society with iTS (in Japan) Intelligent transport systems (ITS) use...

  • Page 32
    ... taking measures against global warming, recycling automobiles, etc. Developing attractive products, improving customer satisfaction and the Company's service brand, improving product reliability, etc. Improving the working environment, promoting a healthy work-life balance, cultivating a climate of...

  • Page 33
    ... (35) 610 Management auditing Mazda's Board of Corporate Auditors has five members, including three external corporate auditors who have no business relationships or other interests with Mazda, and audits the directors in the performance of their duties as per an annual audit plan formulated by the...

  • Page 34
    ... management. In addition, in overseas Group companies in North America, Europe, Australia, and major operational centers in South America, the Group has established internal auditing departments that are fully independent from the operating departments. These departments work closely with the parent...

  • Page 35
    ... information security Group-wide by providing Group companies with guidelines for implementing information security and support for strengthening management systems. Mazda Global Hotline In-house contact point Mazda Global Hotline Outside contact point (attorney's office) Notification Department...

  • Page 36
    ... steps to address or respond to changes in customers' sense of value through its dealership network or sales methods. 2. exchange rates, especially the dollar-Yen and euro-Yen rates The Mazda Group exports products from Japan to the rest of the world and consequently its business results and...

  • Page 37
    .... Such events may lead to significant costs or a loss of trust in the Group, which could adversely affect Mazda's business results and financial position. 10. natural disasters and accidents In addition to measures to protect its manufacturing sites and other important facilities against...

  • Page 38
    ... Oversight of Global Marketing, Sales and Customer Service; In charge of Customer Tsunagari Innovation and Overseas Sales; President, Mazda South East Asia Ltd. * denotes the executive officers who also hold the post of director Masafumi nakano General Manager, Hiroshima Plant Kazuhisa Fujikawa...

  • Page 39
    ...4 1 Management review review of operations / review of operations by Market / Financial Position / Cash Flows 48 eleven-Year Summary of Consolidated Financial Statements 50 Consolidated Balance Sheets 52 Consolidated Statements of operations and Comprehensive operations 53 Consolidated Statements of...

  • Page 40
    ... forward. To strengthen our financial position, we need to accumulate profit and at the same time streamline the balance sheet. In terms of profit, major growth can be expected from the global launch of new products equipped with SKYACTIV TECHNOLOGY in the March 2012 fiscal year. Due to the timing...

  • Page 41
    ... from operating cash flow, as in the past. Given the investment being made to expand our business in emerging markets and for new-generation SKYACTIV TECHNOLOGY, we will first work to maintain a positive free cash flow, and procure funds as required. In addition, the increasing globalization of...

  • Page 42
    ... (Years ended March 31) 2011 2012 Outlook 2011 2012 Outlook Capital expenditures Depreciation and amortization Research and development costs Q6 what do you see as the main points for enhancing corporate value going forward? Mazda's Framework for Medium- and Long-Term Initiatives looks ahead...

  • Page 43
    ... markets and improving the model mix. (global Sales volume) By market, Mazda's domestic sales declined by 7%, to 206,000 units, reflecting a decline in demand as government subsidy programs ended and from the effect of the Great East Japan Earthquake, and this was despite solid sales of the new...

  • Page 44
    ... our Sustainable Zoom-Zoom long-term vision for technology development, Mazda aims to raise the average fuel economy of all its cars sold globally by at least 30% from the 2008 level by 2015, to provide customers with driving pleasure and outstanding environmental and safety performance. Operating...

  • Page 45
    ... 96.0 85.2 3.3 3.8 3.9 256 91.0 4.8 219 4.6 221 4.5 206 4.5 207 3.3 3.9 2007 2008 2009 2010 2011 2008 Sales volume 2009 2010 2011 2012 (Outlook) (Years ended March 31) (Years ended March 31) Research and development costs Share of net sales Market share Mazda mnnual Report 201 1 43

  • Page 46
    .... Scrapping incentives in Russia spurred demand, absorbing the decline in other European countries after the end of government measures that supported sales. 2008 U.S. 2009 2010 2011 2012 (Outlook) (Years ended March 31) Canada and others Market share in U.S. 44 Mazda mnnual Report 201 1

  • Page 47
    ... strategy of concurrently selling the current and the previous model, and of sales promotion activities held in connection with test drive events and motor shows. In addition, the introduction of the Mazda8 in December 2010 helped to strengthen the product lineup and expand the customer base. Sales...

  • Page 48
    ... in the March 2012 fiscal year to grow 1%, to 1,041,000 units. Our sales plan is for a 4% increase, to 90,000 units, with a market share of 8.6%. We will work to achieve this plan through launches of a new Mazda3 with SKYmCTIV TECHNOLOGY and a new BT-50 produced at mutomlliance (Thailand) from the...

  • Page 49
    ... Equity ratio 2011 2007 (As of March 31) 2008 2009 2010 2011 2007 (Years ended March 31) 2008 2009 2010 2011 Total assets Equity Financial debt Net financial debt Cash flows from operating activities Cash flows from investing activities Free cash flow Mazda mnnual Report 201 1 47

  • Page 50
    ... Overseas North America Europe Other areas Cost of sales Selling, general and administrative expenses Operating income (loss) Income (loss) before income taxes Net income (loss) Capital expenditures*3 Depreciation and amortization*4 Research and development costs Free cash flow*5 At the year-end...

  • Page 51
    ... yen 2006 2005 2004 2003 2002 2001 Thousands of U.S. dollars*1 2011 ¥2,919,823 887,662 2,032,161 843,988 668,941...743,627 166,123 777,292 484,677 1,222,495 39,601 $21,346,590 5,187,217 8,349,398 4,459,651 U.S. dollars*1 ¥ 51.53 5.00 284.28 ¥ 37.63 3.00 220.22 ¥ 27.84 2.00 182.91 % ¥ 19.80...

  • Page 52
    ConSolidatEd BalanCE ShEEtS Mazda Motor Corporation and Consolidated Subsidiaries March 31, 201 1 and 2010 Millions of yen ASSETS 2011 2010 Thousands of U.S. dollars (Note 1) 2011 Current assets: Cash and cash equivalents Short-term investments Trade notes and accounts receivable Inventories (...

  • Page 53
    ... of yen LIABILITIES AND EQUITY 2011 2010 Thousands of U.S. dollars (Note 1) 2011 Current liabilities: Short-term debt (Note 9) Long-term debt due within one year (Note 9) Trade notes and accounts payable Accrued expenses Reserve for warranty expenses Other current liabilities (Note 14) Total...

  • Page 54
    ConSolidatEd StatEmEntS of opErationS and ComprEhEnSivE opErationS Mazda Motor Corporation and Consolidated Subsidiaries Years ended March 31, 201 1 and 2010 Millions of yen 2011 2010 Thousands of U.S. dollars (Note 1) 2011 Net sales Cost and expenses: Cost of sales Selling, general and ...

  • Page 55
    ConSolidatEd StatEmEntS of EquitY Mazda Motor Corporation and Consolidated Subsidiaries Years ended March 31, 201 1 and 2010 Millions of yen Equity attributable to shareholders of Mazda Motor Corporation Capital and retained earnings Common stock Capital surplus Retained earnings Treasury stock ...

  • Page 56
    ... StatEmEntS of CaSh flowS Mazda Motor Corporation and Consolidated Subsidiaries Years ended March 31, 201 1 and 2010 Millions of yen Thousands of U.S. dollars (Note 1) 2010 2011 Cash flows from operating activities: Income/(loss) before income taxes Adjustments to reconcile income/(loss...

  • Page 57
    ..., which had a year-end balance sheet date of December 31, 2010, have changed the balance sheet date from December 31 to March 31. As a result, consolidated financial statements for the fiscal year ended March 31, 2011 include financial statements from the companies covering the 15-month period from...

  • Page 58
    ... Companies, useful lives are estimated by a method equivalent to the provisions of the Corporate Tax Code of Japan. Software for internal use is amortized on a straight-line basis over the period of internal use, i.e., 5 years. Leased property Finance leases are capitalized in the balance sheet...

  • Page 59
    ... be realized. Research and develop)ent costs Research and development costs are charged to income when incurred. For the years ended March 31, 2011 and 2010, research and development costs were ¥90,961 million ($1,095,916 thousand) and ¥85,206 million, respectively. Mazda Annual Report 201 1 57

  • Page 60
    ... the average number of shares outstanding during each fiscal year after giving effect to the diluting potential of common stock to be issued upon the exercise of stock acquisition rights and stock options. For the years ended March 31, 2011 and 2010, only information on net loss per share of common...

  • Page 61
    ... policies for using financial instruments The Company and its consolidated subsidiaries finance cash mainly through bank loans and the issuance of bonds, in light of planned capital investment. Temporary surplus funds are managed through investments in low-risk assets. Short-term operating funds are...

  • Page 62
    ... regards short-term investments and investment securities, their fair values as well as the financial standing of their issuing entities are monitored on a regular basis. Ownership of available-for-sale securities are reviewed on a continuous basis. management of liquidity risks related to financing...

  • Page 63
    ... by group to present values. The discount rates used in computing the present values reflect the time to maturity as well as credit risk. 2) Short-term investments and investment securities Short-term investments consist mainly of certificates of deposit of creditworthy financial institutions...

  • Page 64
    ... as well as credit risk. b) Long-term loans payable and c) Lease obligations The fair value of these liabilities is calculated by the sum of the principal and interest payments discounted to present value, using the imputed interest rate that would be required to newly execute a similar borrowing or...

  • Page 65
    ...for-sale securities. However, these securities were excluded from the above tables since their market values cannot be estimated. 6 invEntoriES Thousands of U.S. dollars 2010 2011 Inventories as of March 31, 2011 and 2010 were as follows: Millions of yen As of March 31 2011 Finished products Work...

  • Page 66
    ... loss that was recognized in the consolidated statement of operations for the years ended March 31, 2011 and 2010 amounted to ¥3,416 million ($41,157 thousand) and ¥2,495 million, respectively. 9 Short-tErm dEBt and long-tErm dEBt Short-term debt as of March 31, 2011 and 2010 consisted of loans...

  • Page 67
    ... the rates of expected return on plan assets were primarily 2.1% and 1.5%, respectively. For both the years ended March 31, 2011 and 2010, the estimated amount of all retirement benefits to be paid at the future retirement dates is allocated equally to each service year using the estimated number of...

  • Page 68
    ...) in the consolidated statements of operations for the years ended March 31, 2011 and 2010 were comprised as follows: Millions of yen For the years ended March 31 2011 2010 Thousands of U.S. dollars 2011 Gain on sale of investment securities, net Gain on sale of investment in affiliates, net...

  • Page 69
    ... in the consolidated statement of operations for the year ended March 31, 2011 differs from the statutory tax rate for the following reasons. For the year ended March 31, 2010, since loss before income taxes was reported, the information on the reconciliation from statutory tax rate to effective tax...

  • Page 70
    ..., and is audited periodically by the Global Auditing Department. Derivative transactions are reported, upon execution, to the Company's Chief Financial Officer, Financial Services Division General Manager, and Treasury Department General Manager. The consolidated subsidiaries also follow internal...

  • Page 71
    ... 5,470 3,067 ¥52,470 ¥(702) 600 (38) 195 46 133 395 (15) ¥ 614 ¥(702) 600 (38) 195 46 133 395 (15) ¥ 614 For forward foreign exchange contracts, fair values at year-end are estimated based on prevailing forward exchange rates at that date. Mazda Annual Report 201 1 69

  • Page 72
    ... operating leases as of March 31, 2011 and 2010 were as follows: Millions of yen Operating leases As of March 31 2011 2010 Thousands of U.S. dollars 2011 Current portion Non-current portion ¥ 3,618 12,551 ¥16,169 ¥ 2,464 11,678 ¥14,142 $ 43,590 151,217 $194,807 70 Mazda Annual Report...

  • Page 73
    ... and evaluating business performance. The Company is primarily engaged in the manufacture and sale of passenger and commercial vehicles. Businesses in the Japan, North America, and Europe regions are managed by the Company, Mazda Motor of America, Inc., and Mazda Motor Europe GmbH, respectively...

  • Page 74
    notES to ConSolidatEd finanCial StatEmEntS Millions of yen For the year ended March 31, 2010 Japan North America Europe Other areas Total Elimination or corporate Consolidated Net sales: Outside customers Inter-segment Total Costs and expenses Operating income/(loss) Total identifiable assets ¥ ...

  • Page 75
    ... financial statements and other financial information included in the company's annual report for the year ended March 31, 2011 are presented fairly, in all material respects, in conformity with the generally accepted accounting principles in Japan. President and Chief Executive Officer Executive...

  • Page 76
    ...balance sheets of Mazda Motor Corporation and consolidated subsidiaries as of March 31, 2011 and 2010, and the related consolidated statements of operations and comprehensive operations, equity and cash flows for the years then ended expressed in Japanese yen. These consolidated financial statements...

  • Page 77
    ... March 31, 201 1) rESEarCh and dEvElopmEnt SitES Hiroshima Head Office, Mazda R&D Center (Yokohama), Mazda North American Operations (U.S.), Mazda Motor Europe (Germany), China Engineering Support Center (China) manufaCturing SitES Japan Hiroshima Plant (Head Office, Ujina), Hofu Plant (Nishinoura...

  • Page 78
    ... financial institutions 32.6% 581,171 thousand shares Tokio Marine & Nichido Fire Insurance Co., Ltd. Nippon Life Insurance Company Note: The treasury stock of 10,160,719 shares is excluded in the calculation of the ratio. SharE priCE and trading volumE (Tokyo Stock Exchange, First Section) Share...

  • Page 79

  • Page 80
    Mazda Motor Corporation This report was printed using vegetable oil ink. Printed in Japan